Otero County to refinance jail bonds

The Otero County Commission voted to refinance its jail bonds in order to realize a $14 million savings during a public hearing Thursday evening.

The only thing missing from the hearing was the public; present were county commissioners, county staff, one reporter and Mark Valenzuela, the vice president of George K. Baum & Co., an Albuquerque-based investment firm.

"I think this is historical," said Ronny Rardin, District 3 commissioner and chairman. "And it's a shame there's nobody in the audience to even worry about it. It must mean they trust us 100 percent."

The special meeting agenda states the commission was adopting an ordinance authorizing Series 2011 Otero County Jail Project Revenue Refunding Bonds in an aggregate principal not exceeding $47 million. District 1 Commissioner Tommie Herrell, who was instrumental in bringing about the refinance, asked Valenzuela about the current interest rate for the bonds.

Valenzuela said with the structure the county has outlined in the ordinance, the credit rating would be single "A" and the interest rate would be roughly 3.5 percent. He said until the bonds go to market they won't know for sure, but he expects it to be 3.5 percent. Right now, before the refinance takes effect, Valenzuela said the county is paying about 8 percent on the average coupon. Rardin remarked that will be a 4.5 percent savings for the county.

Herrell said since the commission talked to Valenzuela about the bonds last year, interest rates have gone down so the county expects a better deal than was presented last November.

Advertisement

Valenzuela said the information he shared during last November's presentation to the County Commission was based on a 5 percent interest rate. He said now he's hoping the rate will be 3.5 percent or even lower, which will show the county greater savings than previously estimated.

Valenzuela said when all is said and done, the county will save approximately $14 million by refinancing the bonds now. He said the county will use that savings to pay off the bonds in 10 years rather than 13.

"So you'll be able to pay it off sooner, and have greater savings on it," Valenzuela said.

Rardin said refinancing the bonds will leave the county in great shape 10 years down the road. Once the bonds are paid off, he said the county will have a $4 million surplus per year from the revenues of renting beds to the state Corrections Department and the federal government. He said future commissions "will be smiling real big" because they will have a well-maintained budget. Herrell said the bed-renting contract with the Corrections Department is guaranteed, and the county will have that contract in hand by Monday. It was supposed to be there Oct. 8.

"It got hung up in legal," Pam Heltner, county manager, said.

Rardin added Jose Cordova, director of the probation and parole division of the New Mexico Corrections Department, said the agreement to house inmates at the Otero Prison Facility is a relief for his department.

Dan Bryant, county attorney, said the final version of the ordinance to refinance the jail bonds is posted on the county's website.

Commissioners unanimously passed the ordinance to refinance the bonds.Contact Laura London at llondon@alamogordonews.com